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How I Paid off $40,000 of Debt in 7 months – How determination, perseverance and a dream helped one woman pay off her debt in less than a year and find her passion in the progress.
Debt is, unfortunately, something that most Americans struggle with. By now you know (I hope!) that this is a place to find inspiration and encouragement when you feel like you’re on your own with your money situation.
Which is why I’m so happy to have my friend Michelle share her story of debt freedom with you. She is living proof that sacrifice is so worth it when it comes to paying off debt.
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Read her story to find inspiration to make your own “debt free” story!
Tell us a little bit about yourself and how much debt you were in.
Hey! My name is Michelle Schroeder-Gardner and I blog over at Making Sense of Cents. My husband and I sold our house in July of 2015 and have been traveling full-time since. Before that, I used to be a financial analyst. I used to have around $40,000 in debt.
How did you get into that debt?
It was student loan debt from three college degrees. I had two undergraduate business-related degrees as well as a Finance MBA.
I got into the debt because I had poor money management skills, and student loan debt seemed “normal.” The majority of people take out student loan debt in order to pay for college so I didn’t think it would be a big deal for me to do the same.
What was the tipping point when you decided to throw everything that you possibly could into paying off your debt?
It was when I received my first student loan bill. It was for a significant amount of my monthly income, and I knew I couldn’t pay that every month for a decade or even longer. That just didn’t seem doable, and it was quite stressful to even think about.
What was the hardest part about getting out of debt?
The hardest part about getting out of debt was realizing that I got into so much debt in the first place. I felt a lot of regrets and I felt really stupid because I worked full-time all throughout college (and even most of high school), yet I put hardly any of my income towards paying for school bills upfront.
What tips can you share about what you did to pay off your debt?
The most important thing that I did in order to pay off my student loan debt quickly is that I found ways to make extra money. To make extra money, some of the things that I did included mystery shopping, blogging, staff writing, managing social media for other companies, selling stuff around my home, taking surveys, and more.
Now, if you think that you don’t have enough time in your life to make extra money, I want you to think again. The average person spends over 30 hours, on average, watching TV each week. That is a ton of time and almost as much as a full-time job! Instead, try to take back some of the hours that you may be wasting and put it towards making extra money.
What do you think is most important when paying off debt: making more money or finding money in your budget to put towards the debt? (Or both!)
I think both are extremely important. As you can read from the above question, making extra money is what really helped me to be able to pay off my student loans quite quickly. However, finding money in your budget is important too because the average person is wasting a good amount of money each month on expenses that they don’t need to spend money on.
How long did it take you to get out of debt?
It took me around 7 months to pay off my student loans. It was quick and well worth it!
If you could share just one piece of advice about debt with others who are struggling the same way that you were, what would it be?
My top tip would be to evaluate your students loans before you take any out. There are many ways to save money on college and I made a lot of mistakes that could have been avoided. For example, I could have spent more time at a community college, I could have lived even more frugally in college, and so on.
Looking back on it, would you say that getting into debt was worth it for where you are now?
I think so, but that’s because I would never have started Making Sense of Cents if I didn’t have my student loans (I started my blog to talk about my student loans and my financial situation). My blog now earns me over $100,000 per month and I even travel full-time, and it was all because I started out talking about my student loans.
What tools would you say were instrumental in helping you to get out of debt?
My brain! Does that count as an answer? Haha! No, for real. Staying motivated and keeping my eyes on the end goal were what helped me to pay off my student loans quickly.
Find your own ways to make extra money to get rid of your debt:
6 Easy Ways to Make Money From Home
Make $40,000 per Year From Home as a Bookkeeper
How To Make $20 an Hour Teaching English from Home
It will take 47 months to pay off $40,000 with payments of $1,200 per month, assuming the average credit card APR of around 18%. The time it takes to repay a balance depends on how often you make payments, how big your payments are and what the interest rate charged by the lender is.
Options For Paying Off Substantial Credit Card Debt. There are a number of strategies to pay off large amounts of credit card debt. They include personal loans, 0% APR balance transfer cards, debt settlement, bankruptcy, credit counseling and debt management plans. You may be able to use more than one of these options.
Bottom line. If you have a credit card balance, it's typically best to pay it off in full if you can. Carrying a balance can lead to expensive interest charges and growing debt.
Making more than your required minimum payment can help you pay off debts more quickly and save money in interest charges. Earmark unanticipated funds, such as your tax return or a bonus, for debt payments.
Cancel student debt for borrowers who entered repayment a long time ago. Borrowers with undergraduate debt would qualify for forgiveness if they entered repayment 20 years ago or more, and borrowers with graduate school debt would qualify for forgiveness if they entered repayment 25 years ago or more.
Most lenders evaluate the following before making a lending decision: Credit: Your credit score shows how well you have handled past borrowed money. To qualify for a $40,000 loan, you'll typically need a credit score upwards of 670 or a co-signer with good or excellent credit.
It depends on your financial situation. If you have a relatively high credit score (FICO score of 740 and above), it may be easier to obtain a $40,000 personal loan. Conversely, if your credit score is low (FICO score of 300 to 579) or your credit history is insufficient, you may have trouble getting approved.
If you are offered a 2% interest rate for three years (or 36 months), 3% for four years (48 months), 4% for five years (60 months), and 5% for six years (72 months), your monthly payments for a $40,000 loan will be as follows: Three years – $1,146. Four years – $885. Five years – $737.
Usually, this prescription period is three years for most debts.However, it can stretch up to 30 years for bigger debts like home loans or specific government debts. Remember, you're not legally required to pay off a debt that's prescribed.
Paying off $50,000 in credit card debt will require dedication, consistency and extra payments. To make the last one possible, it's important to understand how much money you're working with every month and where it's going.
Introduction: My name is Margart Wisoky, I am a gorgeous, shiny, successful, beautiful, adventurous, excited, pleasant person who loves writing and wants to share my knowledge and understanding with you.
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Debt is, unfortunately, something that most Americans struggle with. By now you know (I hope!) that this is a place to find inspiration and encouragement when you feel like you’re on your own with your money situation.
